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Terminal market success proves a mixed bag in Northern California

SAN FRANCISCO — The San Francisco Wholesale Produce Market is growing, and the nearby Golden Gate Terminal Product Market, South San Francisco, is holding its own. But the Oakland Terminal Produce Market across the bay is contracting.

The San Francisco City Council in June approved the San Francisco Wholesale Product Market’s expansion plan that included a 60-year lease.

Under the plan, the market will grow to almost 500,000 square feet from 300,000 square feet.

Without the additional space, some of the market’s 28 tenants said they would have been forced to move elsewhere.

Just down Highway 101 at the Golden Gate Terminal Produce Market, business is down a bit. But the 26 vendors are “doing fine,” said Pete Carcione, owner of Carcione’s Fresh Produce Co. Inc., South San Francisco.

“If the economy was stronger, then yes, we would all be doing better,” he said.

One change that he said should bring more parity among the vendors is new leases. The market issued 50-year leases to the vendors who originally formed the market.

As businesses left, the market took over the leases and reissued them at higher rates, creating some discontent. All leases are set to expire Dec. 31.

Beginning Jan. 1, 2013, everyone will pay the same rate, which should be better, Carcione said.

“It’s changed the whole market, but it’s a very good thing,” he said.

Carcione, who took over the family business from his father, Joe, in 1969, is optimistic about the terminal market’s future.

“I think one of the big things is people are thinking wholesale produce markets are dead or dying or just about finished,” he said.

“But as long as there are small independent growers, there will always be a produce market.”

He pointed to the health of small, family-owned ethnic grocery stores as one reason for his upbeat outlook.

“There are a lot more Indian stores,” Carcione said.

“There are Chinese, Vietnamese and Mexican stores. All of these ethnic stores, they’re all doing well.”

But Philip Franzella, president of Franzella Produce Inc., South San Francisco, said his business is down about 30%, and the economy isn’t entirely to blame.

“Generally the economy is down a little bit,” he said.

“But it tanked in 2008, and we were still doing good. Now the whole market is down. We’re doing OK, but you have to adjust for it.”

He cited the region’s changing demographics as one possible reason for lower sales.

“I think it’s slowed because immigration has slowed down,” Franzella said. “For the last 20 years, you’ve really had a lot of people coming in. Now they’re assimilating and moving out of the inner city.”

Those families that remain tend to have fewer children, he said.

Women, who once stayed at home to take care of the children, are now working outside the home.

No longer are they going to the neighborhood market every day. Instead, they shop at chains less frequently, loading up on essentials, Franzella said.

A downhill slide

But on the other side of the bay, the outlook isn’t as bright. At the Oakland Terminal Produce Market, also known as the Franklin Street Market, a handful of vendors hang on.

During the past decade, some have shut their door while others, such as Bay Cities Produce Co., have moved to newer or more expansive facilities.

The buildings that house the market date back to the early 1900s and have historical status, so any major modifications would have to meet environmental and historical regulations, said Margot Lederer Prado, with the city’s Economic and Workforce Department.

The zoning also has changed, and the area near Jack London Square is now designated for light industrial, retail and restaurants, she said.

For more than a decade, there has been talk of the market relocating to part of the nearby former Oakland Army Base.

Any plans are now moot after the Oakland City Council in June approved a proposal by developer California Capital and Investment Group to turn the base into an intermodal and distribution site.

Although the city has plenty of buildings suited to produce wholesalers, Lederer Prado said there have been no takers because the rents in the Jack London Produce District are below market.

She is conducting a food cluster economic study to examine the financial benefits of enticing food-based companies to Oakland. The terminal market will be included.

In addition, Hope Collaborative, an Oakland-based group of community agencies, non-profits and citizens, has received a W.K. Kellogg Foundation grant to study the feasibility of creating a food hub in Oakland.

The terminal market also will be included, although in what role is unknown since the study is in its infancy.